Important Facts about the Second Round of PPP Loans

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A second wave of the Paycheck Protection Program is on its way to businesses still struggling under the economic burden of this global pandemic. This forgivable loan program has changed quite a bit since it was first rolled out in March of 2020. 

It’s hoped that the changes will make it easier for business owners to understand, access, and utilize funds to bolster their businesses throughout this economic recovery. This second wave of PPP funds will be available both to businesses who are applying for the first time and to those who received funds previously. 

Whether you’re a first time applicant or interested in applying again, here’s what you should know:

How to Qualify

The eligibility for PPP funding has changed for this second round. Funds are available for businesses that:

  • Employ 300 people or less 
  • Have already used the full amount of previously issued PPP funds on qualifying expenses
  • Can show a 25% loss of business during 2020 compared to 2019
  • Are asking for no more than 2 million dollars in funding

One of the most notable changes for this second round of funds was the company size. Originally it was offered to businesses with a maximum of 500 employees, but now only businesses with a maximum of 300 employees are eligible. 

PPP Funding Changes

Initially, the PPP funds were intended for a stint of 8 weeks’ worth of business expenses. Shortly after the first round of loans were issued, that window was increased to 24 weeks. Now, a business can choose what timeline they prefer from 8 weeks to 24 weeks to use the funds. 

For further flexibility, the payroll requirements have decreased from 75% to 60% for this wave of loans. This means in order for the loan to be forgivable, a business must use 60% of their PPP funds to cover payroll expenses. Other business expenses such as essential operating expenses, property damage not covered by insurance, and employee protection costs are now considered qualifying expenses. This has added greater flexibility in how a business may spend their PPP funds and still qualify for loan forgiveness. 

There has also been some clarity in regards to tax deductions. Businesses may now claim a deduction on any qualifying expenses that were paid for using their PPP funds. 

What to Consider

If you’re thinking that this round of PPP funding may be a good option and your business meets the qualifications, know that you do not need an established banking relationship to secure your loan. This was a confusing issue initially, but now the Small Business Administration has a list of organizations on their website who are ready to help businesses receive their funding. 

Not only is it easier to find an institution willing to loan your business PPP funds, but the changes during this second wave have made the rules and restrictions around using your funds more flexible. 

Most financial experts would agree that if you need funding to help your business survive the devastating economic impacts we’re still feeling from COVID-19, PPP funds are an excellent option. Your PPP loan is forgivable, and now easily accessible. 

Still Have Questions?

We understand the process of applying for a PPP loan can be intimidating, and our accounting professionals are ready to assist you today. Let us help you navigate the process and ensure that you get exactly what your business needs to succeed. 

Contact us today to get started.